What: Platforms selling vintage and upcycled goods are gaining popularity in cities including Shanghai and Beijing as customers become more price-conscious.

Why it is important: Rising prices, more environmentally conscious consumers, and the celebrity effect are normalizing secondhand shopping for Chinese shoppers, buying not only resale luxury goods but pre-owned fashion and accessories across price points.

According to data released by the Chinese National Bureau of Statistics in October, apparel prices rose by 0.5% compared to last year, leading some to adopt secondhand shopping. Gen Z is becoming more accepting of resale, however, they tend to visit secondhand markets for social reasons rather than environmental ones. As well, in a July survey, online technology platform Youth36kr found younger generations are increasingly inclined to save rather than spend.

Recently, sustainable lifestyle company Bottle Dream and content platform Xiaohongshu launched a recycled fashion initiative in Shanghai complete with used clothes exchanges, upcycling craft workshops and other activities. According to Xiaohongshu, the three-day secondhand marketplace brought more than 2,000 people together.

Xiaohongshu is watching engagement around secondhand rise: circular fashion has garnered more than 20,000 notes as of September 2022, a 693% increase on the prior year.

Secondhand shopping starts to take off in China

What: Disappointed with Farfetch’s declaration for the luxury platform, shareholders sent shares of its stock down 34.9% to USD 5.53.

Why it is important: As customers are beginning to favour in-store shopping again, and in light of the global economic strain, Farfetch’s general goals for driving growth in a fragmented luxury market were not enough to satisfy investors who sent the stock down 34.9%.

Neves presented Farfetch as a collection of three main and intertwined businesses: Platform Solutions, which provides e-commerce capabilities to brands and retailers; the Marketplace, connecting buyers and sellers via e-commerce, and the New Guards Group, which develops brands.

Investors are questioning Farfetch’s capabilities to add up all its ventures, especially how it can leverage New Guards.

Farfetch stock drops 34.9%

What: The New York Times reviews the situation of luxury in the country.

Why it is important: China is not anymore the global growth engine for the industry, but this is only a temporary setback as it is expected that 40% of luxury shoppers will be Chinese by 2030.

2022 has been a difficult year for luxury retail in China, as shown by the new project Taikoo Li Qiantan in Shanghai, which opened on 120,000 sqm at the end of 2021, but stood mostly empty throughout the year, due to mass lockdowns. According to the New York Times and Blomberg, China’s luxury goods market share might have been halved in 2022 due to store closures and customers’ reticence to come back once they reopened.

Only brands such as Hermes or Moncler posted growth in the country, the rest did not experiment the expected V-shaped recovery. While during the pandemic brands focused on opening new locations in second and their tier cities, as well as in Hainan, the New York Times reports that they now redirect their investments in the US, which is growing faster.

As a consequence, there is now a wait and see attitude in China, as, even though no one challenges the fact that the country still remains an important part of the business, players lack visibility on when the market will take off again. As Bain states it, “over dependence on China is risky, but not as risky of not being there at all”.

In China, Luxury shopping faces headwinds 

What: A light Christmas article about the joys of shopping luxury at Bergdorf Goodman.

Why it is important: A very good promotional piece allowing to casually emphasize the behind-the-scene details to make sure customers looking for exceptional Christmas pieces and service know where to go in Manhattan.

The NY Times journalist spends some time within Bergdorf Goodman, which is at the same time a pretext to review the state of department stores affair and also promote the iconic NY luxury destination store. The article astutely insists on the “unique” status of Bergdorf Goodman as a place where true luxury is displayed and where no one ever says no.

Surviving 10 hours and 32 minutes at Bergdorf Goodman 

What: Retail may have been under pressure in recent years, yet Savills report has shown how retail real estate is one of the most resilient for its asset class with major investments during 2022.

Why it is important: Property specialist Savills said that 26.9 billion euros have been invested into the European retail sector so far in 2022, which is up 25% compared to 2021. Investment in shopping centres accounted for 27% of all the retail activity, compared to 14% for the same period last year.

Savills has also observed that there appears to be little change in expansion strategies despite the economic headwinds in Europe. Off-priced retailers and fashion retail investment is continuing with only a small drop in pace during Q3 of 2022.

Prime high street locations are being viewed more favourably due to footfall recovery and rent drops. Savills said on average, prime high street rents across Europe are 34% down on Q4 2019 levels, and they’re even down 29% in usually strong London. The report said that grocery stores still account for around a third of all European retail investment activity and discounters' investment has doubled this year.

Savills reports retail as most resilient real-estate asset class

What: The Emirati retail conglomerate Majid Al Futtaim (MAF) stated that it had raised 1.25 billion dollars a revolving credit facility linked to the company’s environmental, social and governance goals.

Why it is important: The loan aims to cut MAF's Scope 1 and 2 emissions and implement LEED certification for its malls.

First Abu Dhabi Bank led the fund raising, the conglomerate's second sustainability-linked loan, as sustainability coordinator and agent. In June, MAF raised USD 500 million with perpetual green bonds, refinancing existing hybrid bonds.

Majid Al Futtaim raises USD 1.25 billion linked to ESG goals

What: Due to economic strain and uncertainty, companies must navigate properly by retaining employees, investing in emerging roles and building the skills of current leaders to ensure they have the talents to grow even in 2023.

Why it is important: As most companies are hiring or hoarding employees, the dialogue between companies and recruits is changing, leading to competitive employer branding campaigns and benefits packages.

Business of Fashion highlights Macy’s shift in communication to recruit new employees which has led to 97% of corporate jobs filed and “close to that number” for hourly positions. The crisis caused a huge labour shortage and record quitting rates which has created the challenge of developing new policies such as working from home to attract and keep employees. A potential recession in 2023, means that layoffs will be necessary even as the labour shortage keeps key roles unfilled. Instead of assuming employee loyalty instead, over-hiring or resorting to layoffs when the recession hits, experts stress the importance of grooming and leveraging current talent or creating cross-functional roles.

022 showed a C-suite turnover trend making it difficult to redefine who should lead a fashion company. Leadership is more about partnerships, creating transparency and developing community as new and evolving roles around diversity, sustainability and social governance continue to appear. Hourly employees may be concerned about the lack of or mismanagement of these roles, making them important from top to bottom.

Finally, companies need to be mindful of the impact new policies around flexibility and work-life balance affect the working culture. Leader bias toward certain employees who opt to work in the office instead of online could create dysfunctional dynamics. Thus, being intentional, agile and open to adapting to new work models can help with creating an efficient and desirable workplace environment.

Workplace trends of 2023 defined by BoF

What: The Australian department store company is being sold off by its owner, the South African retailer company Woolworths to Anchorage Capital Partners.

Why it is important: David Jones, just like Myer’s, has been lagging in terms of profitability for a number of years, as the Australian market is increasingly polarized.

Woolworths Holding, the South African retail giant who bought Australian David Jones in 2014 for $1.41bn, is reported to sell the company to Anchorage Capital Partners, a private equity firm. According to the newspaper, the selling price would be between $120m and $130m and the deal should be closed before the end of this year.

Woolworth has created an agreement with Anchorage Capital Partners due to a disappointing return on investment, resulting in Woolworth’s withdrawal from the department store market and Anchorage’s takeover of 43 stores, some of which had already closed as part of Woolworth’s turnaround efforts.

It is specified that David Jones' flagship on Bourke Street is not included in the sale and that with its estimate of AUD 250 million it would likely be sold next year. The current CEO, Scott Fyfe, is expected to stay on, with the new owner backing his recovery plan (referred to as Vision 2025+), with the company expected to continue to focus on physical and online sales.

David Jones, after suffering from the Covid-19 pandemic like other retailers, turned a profit in 2021 for the first time since 2018, and revamped its flagship stores in Sydney and Melbourne.

David Jones to be sold to private equity firm SOURCE 1

David Jones to be sold to private equity firm SOURCE 2

What: Vogue Business reviews the main retail trends worth to be remembered that took place in 2022.

Why it is important: 2022 was the return of the high-scale collaborations, not only between brands, or between a brand and a retailer, but also between retailers themselves. The IADS expects more of such collaborations as it is a great way to generate brand visibility and open up databases, while maximizing the local aspect of both retailers at the same time.

Vogue reviews what happened in retail in 2022, in terms of store openings, collaborations and consolidation. According to the medium, physical stores made a comeback in 2022 and the formula for brick and mortar evolved since the pandemic, with more experience and entertainment.

This is the reason why the collaboration that took place were interesting: Dior takeover at Harrods (reported to be ‘overwhelmingly positive’ even though on another note, Harrods sent a promotional email with 50% discount as early as the 24th of December), Dior and Sacai collaboration at Browns, Jacquemus in Selfridges, or the collaboration between Machine-A and Smets, or Nordstrom and 11 Honoré. More collaborations of that scale are planned to take place in 2023.

The year in retail and a look at collaborations

What: The e-commerce beauty platform recently covered in IADS’ exclusive, Thirteen Lune, is opening its first brick-and-mortar store in Los Angeles sometime in early 2023.

Why it is important: As covered in this week’s exclusive, Thirteen Lune is taking its innovative and inclusive approach to beauty retail from online to in-store as it prepares to open in Los Angeles early next year.

Its first iterations of physical retail were accomplished through its shop-in-shop partnership with J.C. Penney. Now, Thirteen Lune looks to further its omnichannel approach with a flagship that goes beyond a traditional beauty store model.

Thirteen Lune to open first physical store

What: Rumors are spreading that Shein is changing its strategy to become a marketplace in order to compete with big online retailers like Amazon and Alibaba.

Why it is important: The Wall Street Journal reportedly saw a memo sent by Shein to its investors stating that they are considering a move to sell merchandise from third-party brands in addition to its own brand which lines up with Shein recently divesting operations and opening warehouses and manufacturing in central Europe.

Shein rumoured to become an online marketplace

What: Coresight Research and Bolt release digital sales data that reveals key holiday trends.

Why it is important: As consumers embrace flexible payment options, retailers and brands are responding by onboarding platforms to meet that demand.

Other trends include more investments in e-commerce management, personalization, and experiential retailing this year. On the front end, the authors of the report said retailers and brands have slashed prices on top categories such as apparel, toys and electronics.

Mastercard SpendingPulse said U.S. retail sales (minus automotive) grew 7.6% year-over-year this holiday season.

Coresight shares digital sales data for holiday trends

What: The Hong Kong-based group Bluebell is strengthening its position in China through the duty-free market in Hainan Island after completing the acquisition of Star Brands Travel Retail.

Why it is important: The acquisition makes Bluebell Group the sole owner of travel retail operator, Star Brands Travel Retail, in Hainan’s duty-free hub, an important location for luxury shopping in China.

While tax-free shopping has been allowed on Hainan Island since 2011, its activity has boomed since 2020 becoming the preferred destination of Chinese shoppers, deprived of international travel since the pandemic. This trend has continued and accentuated, allowing many houses to achieve strong increases in the region, making Hainan Island a strategic location for the luxury industry.

Star Brands Travel Retail operates 14 brands, has 50 employees, and has seen retail sales under its management grow 300% in 2022 compared to 2021.

Bluebell Group fully acquires Star Brands Travel Retail

What: The Baltic countries are experiencing inflation rates that would not be acceptable in other parts of Europe.

Why it is important: They might only experience before the others what is next for all. The worrying part is that Baltic countries have built-in psychological and structural cushions that might miss in other European countries. For that reason, 2023 will be long and difficult both in terms of economy but also politics.

In the Baltics, inflation has reached considerable peaks when compared to the rest of Europe. In Lithuania for instance, inflation reached 21%, which significantly impacted retail activity. It is believed that Baltic countries are canaries in the coal mine when it comes to inflation and Europe, as the three countries might experience what is coming next for other European countries.

Baltic countries already have experience of inflation, and the memories of the forced occupation by the Soviet Union makes the pill easier to gulp. The rest of Europe might not have the same feelings and the shock could be more important. 10% inflation in the rest of Europe could be as impactful and difficult as the current 20% rate in the Baltic countries. Economists are worried that the current levels of inflation might leave permanent marks on the economy.

Inflation in the Baltics, a warning for the rest of Europe 

What: Korean rivals are competing for a new location in Gwangju, south of the country.

Why it is important: While Lotte shies away from the competition, this suggests that there is still room for expansion for physical retail in Korea, one of the most connected markets on the planet.

Hyundai and Shinsegae are competing for a new mixed-use project in Gwangju (south of Korea) which would include a shopping mall, a hotel, a theatre and a park. It would be the first one for Hyundai in the city (where its last location was closed in 2013) and the second one for Shinsegae. Both proposed projects would be of an approximate size of 300,000 sqm.

Hyundai and Shinsegae competing to open a new mall in Gwangju 

What: Everything in the Corner Shop will be from the Reselfridges category, including ready-to-wear, accessories and lifestyle products.

Why it is important: To fit with the silver theme, the Corner Shop will hold a special section for green jewellery featuring sustainable diamonds made with atmospheric carbon by Sky Diamonds and customizable fine jewellery from Hatton Labs.

The company has set out a 2030 target of reaching 45% of circular transactions to come from circular products and services by stocking products that meet its environmental and ethical standards.

Selfridges transforms the Corner Shop with silvery vintage pop-up

What: Kering and L’Occitane are joining forces to launch the Climate Fund for Nature.

Why it is important: In order to protect and restore biodiversity, Kering and L’Occitane will endow the fund with 140 million euros, with a goal to reach 300 million euros in the long term eventually opening up to other partner companies.

The fund will be managed by the management company Mirova, a subsidiary of Natixis Investment Managers dedicated to responsible investment and will be operational in the first quarter of 2023 in the form of a simplified joint-stock company with variable capital. Its aim is to support projects dedicated to the protection and restoration of nature as well as to farmers for the transition to regenerative agriculture.

In addition to being sustainably focused, the fund will prioritise projects that promote the independence of women in terms of access to finance, land and trading in countries where investors obtain their main raw materials.

Kering and L’Occitane team up for climate fund

What: Around a dozen companies have signed The Fashion Pact’s Collective Virtual Power Purchase Agreement.

Why it is important: The 12 chief executive officers have committed to procuring renewable electricity with the goal of getting to 100% renewable energy across their companies’ own operations by 2030.

Bally, Michael Kors and Versace owner Capri Holdings Ltd.; Ermenegildo Zegna Group; Farfetch; Ferragamo; Gucci, and Saint Laurent parent company Kering; Ferragamo; Prada Group; Calvin Klein and Tommy Hilfiger owner PVH Corp.; Ralph Lauren; Coach and Kate Spade parent company Tapestry Inc.; Under Armour, and Zimmermann have all signed The Fashion Pacts renewable energy initiative to help the fashion industry move toward more sustainable practices.

Kering, Capri Holdings, Tapestry and PVH sign renewable energy initiative

What: Amazon reached a settlement with the European Union on three antitrust investigations, as the e-commerce giant addressed EU concerns over clauses applicable to third-party sellers, saving itself a fine that could reach 10% of its worldwide turnover, i.e. billions of dollars.

Why it is important: Amazon was accused of using its size, power and data to promote its own products and gain an unfair advantage over rival merchants selling on its online platform which has resulted in the company agreeing not to use third-party seller data for its own competitive retail business.

Amazon has also agreed to create a second purchase option for competing products in the event that an Amazon product appears as the first choice if it differs substantially in price and delivery speed.

Finally, Amazon agreed that sellers under Amazon's Prime function could choose their own logistics and delivery services, other than those approved and chosen by Amazon.

Amazon avoids fines through agreement with the EU

What: Macy’s Inc. CFO shares insights on the retailer’s new digital marketplace, pricing science and holiday positioning strategies.

Why it is important: Macy’s has adjusted how they view inventories and buying as they use their new marketplace as a testing ground for new categories and products without the same risk and operating expense as a traditional website.

Data showed that customers had been searching for products and categories that Macy’s did not have. Thus, the retailer created their marketplace which has also attracted younger consumers who are generating larger baskets in terms of units per order. According to Macy’s CFO, they are also innovating on the wholesale front by changing the way they buy and integrate teams across planning, finance and the supply chain. Buying has become more conservative as they build reserves into their product purchasing so that they can have more flexibility to adjust during the season based on demand. According to Macy’s data, 96% of marketplace customers are shopping what Macy’s has traditionally bought wholesale and listed on its website.

Price promotions are also seeing a revolution through technology. Using pricing science, Macy’s is conducting markdowns by store, by location, by style and even based on the availability of inventory and the level of sell-throughs.

Macy’s CFO did not underestimate the impact of inflation but believes that the retailer’s recent modernization initiatives have positioned them well for the gifting season.

Macy’s CFO shares on modernization

What: Allbirds CEO shares insights into the company’s success as a direct-to-consumer brand, highlighting the need for more than simply a storefront and social media as an online business.

Why it is important: The pandemic created an overcrowded online competition for brands that saw online as the future, but Allbirds is looking at physical stores as a centre for acquiring new customers, underscoring the importance of wholesale partnerships to bring products to where existing and prospective customers are.

The path to profitability, according to Allbirds CEO, is investing in infrastructure to build global channels that can support the brand.

Allbirds CEO shares DTC playbook

What: Following its YNAP acquisition in August of this year, Farfetch lays out plans to reach profitability and secure the luxury market.

Why it is important: The company’s near-term focus is on profitability with expectations of gross profit and order contribution margins to improve in 2023 but expects the costs of new partnerships to amount to around USD 170 million.

In 2023, the company expects GMV to increase 20 to 22% year-on-year compared to the 2022 outlook, reaching USD 4.9 billion, driven by underlying business growth and GMV from signed partnerships. Farfetch has been struggling with GMV this year: in the most recent earnings, Q3, it said GMV dropped 4.9% year-on-year; in Q2 it increased 1.3% year-on-year; and, in Q1 it increased 1.7% year-on-year.  Farfetch’s shares dropped 34.9% today during the investor event during which it announced its plans to achieve profitability.

More growth is planned for its Farfetch Platform Solutions business, the whitelabel arm of the company used by Bergdorf Goodman, Ferragamo and others to run their e-commerce sites. By 2025, Platform Solutions is expected to represent USD 4.3 billion in GMV, while its marketplace represents USD 3.8 billion, growing 8 to 10%. Brand platforms, which includes Off-White owner New Guards Group and the partnership with Reebok, are expected to represent USD 1.5 billion.

Farfetch lays out plans for the future

What: Gen Z is attracted to self-expression and individuality but is easily influenced by price and inclusive marketing.

Why it is important: Several surveys of Gen Z regarding their spending and shopping habits has revealed a new understanding of how they view brand loyalty.

According to the Gen Z Fashion Report by student affinity network Unidays, a majority (61%) of respondents said they think brands should do more to eliminate gender from styling, and just under half said they are more willing to buy from a brand that has better gender inclusivity through their marketing. Overall, Gen Z is harder to please overall, according to Morning Consult which found the average favorability rating for brands across the country is 27% for Gen Z, compared to 33% for all adults and a rating of 36% for millennials.

According to data from Bank of America for September of 2022, 73% of Gen Z say it’s hard to save money right now, and 56% say inflation has created more financial stress. Teens’ self-reported spending increased slightly by 3% year over year to USD 2,331 according to research firm Piper Sandler’s fall 2022 Taking Stock With Teens Survey of 14,500 U.S. teens. Female teens led that spending increase too, with that group’s overall spend up 10% year over year and clothing being 30% of their wallet share, the highest it’s been since 2012.

60% of Gen Z agree that the brands they shop with are an expression of who they are and 77% don’t want to feel like they’re put in a box, derived from 2020 survey data from Wunderman Thompson Intelligence.

Gen Z brand loyalty looks different

What: The fashion industry has cheered this year as consumers have repeatedly defied economists’ predictions, and while a global recession may still be on the table, there are still reasons for hope.

Why it is important: Easing inflation is leading to an uptick in consumer sentiment regarding the economy.

Consumers don’t seem to share economists’ and fashion executives’ doom-and-gloom mindset, which was demonstrated through the University of Michigan’s index of US consumer sentiment, hitting 59.7 in December, below a reading of 70.6 a year ago, but up from November and above economists’ average forecast.

And a Wednesday survey from the Confederation of British Industry reported an 11-point uptick in consumer demand in December, up from a 19-point drop in November. Forecasters had been projecting a 20-plus-point decline this month. As well, UK clothing sales volumes rose 2.1% last month, while in the US, sales for stores specialising in clothing and clothing accessories dipped a relatively mild 0.2%.

Hopes for 2023 improve